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Monthly GST Filing in Malaysia

Implemented in April 2015, the Goods and Services Tax (GST) is a value added tax in Malaysia. Every GST registered person is obliged to file GST every month (or every 3 months), depending on the annual revenue of all taxable supplies of the registered person.

 

First thing first, who needs to register and file GST?

  1. Compulsory :
    In Malaysia, it is a mandatory requirement for businesses with an annual sales turnover of more than RM500,000 to register for GST with the Royal Malaysian Customs Department and file GST returns with effect from May 2015.
  2. Voluntarily :
    Businesses with less than RM500,000 in annual sales turnover can opt for voluntarily GST registration and they will be bound by a two-year registration law, unless they ceased their operation and companies during that period.

 

When is the return due of GST?

The GST reporting frequency varies according to the annual turnover of the company.

  • Businesses with annual turnover below RM5 million, the filing frequency is quarterly.
  • Businesses with annual turnover above RM5 million, the frequency of filing is monthly.

The deadline for GST filing (GST Returns and payment of GST) is the last day of the month following the taxable period. That means any GST return is due within 30 days of the end of the reporting period. Filing can be done either by post or online. Please note that payments are due on the same deadline, and it can be paid via bank transfer, cheques, money orders etc.

 

Is there any penalty if the filing of an incorrect return or late payment occurred?

  1. Penalties – Incorrect Return
    • Fine not exceeding RM50,000 or imprisonment not exceeding 3 years or both; and
    • Penalty equal to the GST undercharged
  2. Penalties – General Offence
    • Fine not exceeding RM30,000 or imprisonment not exceeding 2 years or both.
  3. Penalties – Late Payment
    • Within 30 days – 5%
    • After 30 days but not exceeding 60 days – additional 5%
    • Every subsequent 30 days or part thereof – additional 3%
    • Subject to a maximum tax of 25% of the late payment penalty.

Additional note: Input tax credit mechanism

Only GST registered businesses can charge and collect GST. In addition, businesses are eligible to claim whatever amount of GST paid on the business inputs by offsetting against the output tax. That means the excess amount of output tax shall be remitted to the government within the stipulated period. Businesses are allowed to make a claim for refund from the government if the amount of input tax cannot be fully recovered.